U.S. patent number 8,560,412 [Application Number 11/437,792] was granted by the patent office on 2013-10-15 for method and apparatus for financial investment advice available to host of users over a public network.
This patent grant is currently assigned to TrueGenius, Inc.. The grantee listed for this patent is Bill Snow, Stephen B. Sutherland. Invention is credited to Bill Snow, Stephen B. Sutherland.
United States Patent |
8,560,412 |
Snow , et al. |
October 15, 2013 |
Method and apparatus for financial investment advice available to
host of users over a public network
Abstract
The investment arrangement funnels the knowledge and strategies
of a host of advisors through an impartial system leveraged by a
host of investors to access, evaluate and then easily invest in one
or more strategies. Investment is made by an investment company
which acts as a holding company for the investor. The advisor
provides instructions to the investment company regarding buy and
sell instructions. The strategy of each advisor is clearly stated
and investments are restricted to the strategy. The investment
company provides a database of all trades by an advisor so that
both actual and relative performance can be measured.
Inventors: |
Snow; Bill (Toronto,
CA), Sutherland; Stephen B. (Aurora, CA) |
Applicant: |
Name |
City |
State |
Country |
Type |
Snow; Bill
Sutherland; Stephen B. |
Toronto
Aurora |
N/A
N/A |
CA
CA |
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Assignee: |
TrueGenius, Inc. (Aurora, ON.,
CA)
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Family
ID: |
4164951 |
Appl.
No.: |
11/437,792 |
Filed: |
May 22, 2006 |
Prior Publication Data
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Document
Identifier |
Publication Date |
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US 20070038544 A1 |
Feb 15, 2007 |
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Related U.S. Patent Documents
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Application
Number |
Filing Date |
Patent Number |
Issue Date |
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09570814 |
May 15, 2000 |
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Current U.S.
Class: |
705/35; 705/39;
705/37; 705/36R; 709/200; 709/202; 705/31 |
Current CPC
Class: |
G06Q
40/06 (20130101); G06Q 40/00 (20130101); G06Q
40/02 (20130101) |
Current International
Class: |
G06Q
40/00 (20120101) |
Field of
Search: |
;705/36R,37,39,31
;709/200,202 |
Foreign Patent Documents
Primary Examiner: Felten; Daniel
Parent Case Text
This is a Continuation Application of U.S. patent application Ser.
No. 09/570,814 filed in the United States Patent Office on May 15,
2000.
Claims
The embodiments of the invention in which an exclusive property or
privilege is claimed are defined as follows:
1. A method of independent investors investing in one or more of a
series of unrelated investment portfolios maintained on behalf of
individual investors by a licensed investment entity using a
computer system of the licensed investment entity and having an
investment account for each individual investor, said method
comprising: accessing an online computer having detailed
information regarding each investment portfolio including a profile
of a registered advisor responsible for the purchase and sale of
financial instruments of the investment portfolio specifying any of
the registered advisor's educational qualifications, job experience
and investment experience, and additionally specifying an
investment strategy of the portfolio with specific restrictions
regarding the financial instruments available for purchase within
the portfolio; using the computer system of the licensed investment
entity to track changes in each of said series of unrelated
investment portfolios and specific restrictions thereof on behalf
of independent investors using the investment accounts; receiving
electronic instructions from independent investors with respect to
a purchase or sale of any of the unrelated investment portfolios
and executing the sale or purchase, via the computer system of the
investment entity, in accordance with the received instructions;
sending electronic notice, via the computer system of the
investment entity to any of the registered advisors, of additional
funds to be invested or funds to be divested in the respective
investment portfolios; receiving electronic instructions at the
computer system of the investment entity from any of the registered
advisors, with respect to additional funds, to purchase financial
instruments for the respective portfolios, and purchasing the same
when the financial instruments meet the specific restrictions of
the respective investment portfolios; receiving, at the computer
system of the investment entity, electronic instructions from any
of said registered advisors to sell financial instruments in the
respective investment portfolio and executing the sale thereof
including the sale associated with instructions specific to funds
to be divested in the particular investment portfolio; accessing an
online searchable database by investors and non-investors
containing full details of past purchases and sales of financial
instruments of each investment portfolio whereby investors have
sufficient detailed information to conduct their own online
research and assessment of the actual performance of any of the
series of unrelated portfolios.
2. A method as claimed in claim 1 including the steps of accessing
the online computer system and selecting an investment portfolio
registration process and entering information to establish a new
investment portfolio and an individual as a registered advisor
thereof; said registration process including specifying the profile
of the registered advisor and the investment strategy of the new
investment portfolio with the specific restrictions; and accepting
and adding the new portfolio to the series of investment portfolios
maintained via the computer system of the licensed investment
entity.
3. A method as claimed in claim 1 wherein accessing the online
searchable database accommodates querying of the searchable
database with respect to one or more investment portfolios and
providing accurate time information of actual purchase or sale of
financial instruments associated therewith.
4. A method as claimed in claim 2 wherein accessing the online
searchable database accommodates querying of the searchable
database with respect to one or more investment portfolios and
providing accurate time information of actual purchase or sale of
financial instruments associated therewith.
5. A method as claimed in claim 1 including providing via the
computer system of the investment entity financial compensation to
the registered advisor of an investment portfolio upon a sale of
all or part of the respective investment portfolio by individual
investors that realized a profit.
6. A method as claimed in claim 2 including providing via the
computer system of the investment entity financial compensation to
the registered advisor of an investment portfolio upon a sale of
all or part of the respective investment portfolio by individual
investors that realized a profit.
7. A method as claimed in claim 1 including providing electronic
notice via the computer system of the investment entity for each
investment portfolio of a change in the specific restrictions of
the investment portfolio.
8. A method as claimed in claim 2 including providing electronic
notice via the computer system of the investment entity for each
investment portfolio of a change in the specific restrictions of
the investment portfolio.
Description
FIELD OF THE INVENTION
The present invention relates to a method and system for receiving
and considering investment advice and investing in accordance with
such investment advice.
BACKGROUND OF THE INVENTION
The present application is directed to a financial investment
system which is available to a host of users over a public
network.
The INTERNET has introduced new ways for carrying on business and
provides individuals with a simple procedure for investigating new
purchases. Webpages have replaced physical places of business and
also act to market the particular wares or services of particular
companies and individuals. Such webpages typically, are freely
available to anyone having a computer and INTERNET access. The wide
access to a host of potential clients and the ability to
inexpensively provide detailed information to such clients has
changed the way business is conducted.
Investors now have the capability of tracking their investments
over the INTERNET as well as conducting research and providing
instructions with respect to trades through online brokers. An
investor can research a host of different mutual funds which all
allegedly reduce the investment risk due to diversification. These
mutual funds are managed by an advisor or fund manager and provide
an effective investment vehicle, particularly where the amount to
be invested is small. A certain fee is paid by the investor for the
professional expertise provided in the administration and
investment direction of the fund. The individual investor does not
have any control of the fund other than whether to invest or divest
themselves of the particular fund. The amount of timely information
that is available with respect to actual trade activities of the
fund is limited and summarized. Therefore, the actual day to day
decisions of the fund manager are hidden and difficult, if not
impossible, to evaluate.
A different form of investing is direct purchase of stocks through
a broker or electronic discount brokerage service. In the case of a
broker, the stock selection is ultimately determined by the
investor but this decision is often made based on the broker's
recommendation. Research can be provided to assist the investor in
evaluating the recommendations. Independent third party tracking of
the particular advice provided by the broker is not normally
available and thus, it is typically up to the investor to record
and maintain such data. This requires considerable discipline and
typically is inaccurate over time.
Another issue with respect to a broker is the possibility of
"churn", which refers to the practice of buying and selling stocks
for the primary purpose of increasing commissions without
necessarily creating additional value for the investor.
This practice is difficult for the individual investor to evaluate
and leads to increased uncertainty.
Investors are often influenced by "a hot tip". The "hot tip" may
originate with a friend or colleague who is recommending a
particular stock. On occasion, brokers also contact investors
recommending a particular investment. Nervous or careful investors
may be concerned due to a possible conflict of interest. It would
be desirable to have historical data with respect to the
performance of the broker's recommendations over time. Similar
tracking of the performance of a colleague's previous
recommendations would be desirable to assist the investor in making
a sound financial decision. Further, there is no independently
audited information as to whether the provider of such "hot tip"
actually acted on his/her own advice. In fact, it has been an
investment industry practice to specifically deny any correlation
between advice and actual trading activities. In some cases, a
broker may be recommending to buy a given stock while his/her
brokerage is in fact selling.
Some investors group together and form a stock club and purchase
investments on their group's behalf. It would also be desirable for
individual club members to be able to consistently evaluate the
stock club's performance relative to other investor's funds and to
provide a more convenient vehicle for individual members of the
club to join or leave in an equitable manner.
The present invention addresses a number of these problems and
provides a different method and system for investment.
SUMMARY OF THE INVENTION
The present invention is directed to an online investment
arrangement. The arrangement includes a series of advisor webpages,
where each webpage promotes a particular investment strategy that
will be followed by a given advisor. Each advisor webpage provides
a link to a corresponding webpage of an investment entity. The
webpage of the investment entity includes a certified definition of
the investment strategy that has been selected and allows an
investor to invest according to the stated strategy while
maintaining the advisor in a capacity of guiding the investing
decisions in accordance with the stated strategy. In this way, an
account is established for each investor and funds are invested in
one or more selected investment strategies.
According to an aspect of the present invention, an online
investment method comprises the steps of an investor viewing, using
a computer, a host of investment strategies promoted by self
proclaimed advisors, selecting using the computer, a particular
investment strategy for investing, receiving information at the
computer from a licensed investment entity providing confirmation
of the investment strategy and requiring information necessary for
investing according to a selected investment strategy, transmitting
using the computer the required information for investing and
providing the funds necessary for investment to the investment
entity. The investment entity invests according to the strategy on
behalf of the investor.
A computer online investment system, according to the present
invention, comprises a host of investment advisors of widely
varying backgrounds and experience. These backgrounds and
experience are not limited to conventional mutual fund advisors.
Each investment advisor makes available by an online computer
system, their investment strategy and limitation with respect to
future investments, their qualifications or justification for the
basis of the investment strategy together with a computer link to
an investment company. The investment company is qualified to open
and maintain accounts for investors and to purchase and hold
investments or shares in investments on their behalf. The
investment company includes the capability to invest for an
investor according to a selected investment strategy taken from the
investment strategies of the advisors when so instructed by the
investor.
The investment company seeks instructions of any advisor with
respect to the investment of additional funds available from new
investment instructions received from investors that selected the
particular advisor's strategy. The company invests according to the
instructions received from the advisor given that the instructions
comply with the stated investment strategy and limitations of the
advisor.
According to an aspect of the invention, the investment company
operates an online computer system available to the investor and
each advisor's strategy is available on said system as well as
financial research data to assist in the assessment of the strategy
over time.
According to yet a further aspect of the invention, the online
computer system includes historical investment information with
respect to any of the investment strategies, to allow independent
evaluation of the strategies by an investor prior to investing.
According to yet a further aspect of the invention, the historical
investment information includes detailed stock trade information
and timing thereof relative to the current prices, volumes, and
highs and lows over arbitrary periods commensurate with such stock
trades.
According to yet a further aspect of the invention, the online
computer system allows an investor to submit queries with respect
to a selected investment strategy, which queries include the
capability to investigate the timing of stock trades and the price
thereof on an ongoing basis such that real assessment of the
investment strategy on a current basis can be carried out.
A computerized online system for investing in mutual funds or
similar funds according to the present invention, comprises a
database of possible advisor funds accessible over a public network
using a computer. The database includes for each advisor fund, a
stated investment strategy to which investments of the fund will be
limited. The database provides financial performance measurements
for each advisor fund and additionally, accommodates user defined
criteria associated with trades of the advisor funds for
investigating the advisor funds. The database also includes a link
back to the advisors' webpages and may also store historical copies
of the advisors' pages so that potential investors cannot only view
the current narrative of the advisor but can also review prior
narratives.
According to yet a further aspect of the invention, an advisor may
instruct the investment company to cap the fund thereby preventing
new investment investors from joining. This might be regarded by an
advisor to ensure that the overall size of a given fund does not
make it difficult to quickly move in and out of security postings
in small cap stocks, for example.
The online system preferrably includes a series of performance
evaluation tools which the investment company has developed to
assess the performance of different advisors.
The online system accommodates investors opening an account for the
purpose of investing, including investing in any of the mutual
funds. At least some of the mutual funds include non conventional
advisors promoting investment according to their stated strategy.
The non conventional advisors receive information with respect to
additional funds received for investment according to their stated
strategy and the advisor provides instructions to the online system
with respect to the particular investment to be made with the
additional funds. The advisors further provide buy and sell
instructions to the online system to effect management of their
respective fund in accordance with the stated strategy.
The non conventional advisors may also specify a proportional
portfolio strategy whereby they specify a selection of companies
and a corresponding percentage range that the volume of each equity
should comprise of the total funds available. The investment
company will adjust through automatic buy and sell orders, the
portfolio such that the investment strategy is upheld.
According to yet a further aspect of the invention, the
computerized online system includes some of the non conventional
advisors having separate webpages promoting their investment
strategy and providing a link to the online system.
According to yet a further aspect of the invention, the online
system is operated by a licensed brokerage.
According to yet a further aspect of the invention, each advisor
receives compensation based on investors selling the particular
advisor fund and realizing a profit.
According to yet a further aspect of the invention, each advisor
receives an incentive bonus from the investment company if such
advisor invests his/her own money in the particular advisor fund
he/she is advising. If the advisor makes it known to investors that
he/she was his/her own fund, such investors will be given an
opportunity to automatically sell out of such fund if such advisor
removes his/her personal monies from such fund. If the investment
strategy is provided by an "automated" system, the investment
company pays no advisor's fees.
According to yet a further aspect of the invention, the advisor
does not receive any compensation with respect to the purchase or
sale of investments for the particular fund. With this arrangement,
the advisor is separated from any transaction fees associated with
the buy and sell of stock according to his recommendations, and as
such, does not have a conflict of interest.
According to yet a further aspect of the invention, the system may
accommodate modification of any stated strategy by a particular
advisor, after appropriate notice has been provided to the
investors in the fund. Basically, any modification of a strategy
will require agreement with the operator of the online system who
provides appropriate notice to the investors.
According to yet a further aspect of the invention, the advisor or
investment company can decide who may receive information about the
investment strategy, and who may correspondingly invest in such
strategy. This accommodates limited or private advisor funds.
According to yet a further aspect of the invention, some of the
advisors are provided by the online system with a specified
fictitious dollar amount to be invested by the advisor and
identified to would be investors as fictitious. This allows the
advisor to establish a track record for his investment strategy
without actual dollars being invested in the fund. In this way,
advisors can gain recognition without full funding.
BRIEF DESCRIPTION OF THE DRAWINGS
Preferred embodiments of the invention are shown in the drawings,
wherein:
FIG. 1 shows an online computer based investment system which uses
the INTERNET to allow investors to review investment strategies of
different advisors and to evaluate the performance of the advisor's
strategy including trade executions;
FIG. 2 shows a webpage of an advisor promoting his particular
investment strategy;
FIG. 3 shows an opening webpage of the online system which is
accessed by a would be investor;
FIG. 4 shows a general overview of an investor and advisor and the
online system;
FIG. 5 shows additional details of the online system;
FIG. 6 shows the relationship of the investor, advisor and the
online system;
FIG. 7 shows further details of the system;
FIG. 8 is an example of a webpage summary of an advisor maintained
by the investment company;
FIG. 9 is an example webpage of an advisor that is maintained by
the advisor separately;
FIG. 10 is a webpage showing example fund restrictions which might
be specified by an advisor when creating a fund with the investment
company; and
FIG. 11 is a webpage report from the investment company showing a
particular investors' portfolio and the security exposure of the
collective portfolio.
DETAILED DESCRIPTION OF THE PREFERRED EMBODIMENTS
FIG. 1 shows an overview of the investment system 1. This system
allows a diverse group of advisors to use webpages to promote their
investment strategy and a much larger diverse group of investors to
review these strategies and make informed investment decisions. The
system recognizes that the expertise of advisors is quite diverse
and individual investors can benefit from this knowledge if it is
provided to them in an effective manner. The system allows both the
advisors and the investors the benefit of using a licensed
brokerage or other qualified company as an intermediary between an
advisor and the investor. Any investments are protected and the
advisor merely provides investment instructions. The brokerage
service in contrast is not recommending any of the investment
strategies and is not confirming the qualifications of the advisors
or their promotional statements. However, the brokerage does ensure
that the investment strategies of each advisor are adhered to and
that no investments will be made outside of the strategy. In
addition, the stocks or investments purchased according to the fund
are held by the brokerage on behalf of investors.
The system of FIG. 1 uses the INTERNET or other network for
allowing investors to consider and research different investment
advisors who are promoting their investment advice. The advisors 2
are linked by a computer or otherwise arrange for an advisor
webpage 6 to be available on the web.
The advisors are responsible for the content of their webpages 6.
These advisor pages link 8 to a series of corresponding webpages 33
maintained by the investment company. These webpages 33 carry
factual current performance and historical data, concerning advisor
funds, certified by this investment company. Each webpage 33 is
preferrably of a standard type format which is determined by the
investment company and contain links back to their company advisor
webpages 6.
The individual webpages 6 of the advisors could be consolidated in
one place, however, in most cases, they will be provided on
separate servers determined by the advisors and paid for by the
advisors. As noted above, they include a link 8 to the computer
server 10 of the investment company and specifically, to the
webpage 33 maintained for each advisor by the investment
company.
Individual investors, using their computers 4, can logon the system
and either review individual webpages 6 of different advisors,
certified webpages 33, or can query the computer system 10 of the
investment entity. This computer system allows for extensive
database evaluation which is shown as including investment
evaluation 14 and advisor evaluation 16. In particular, the
database 12 can be queried by potential investors, and/or actual
investors to review and consider investments. The database could be
queried to rank different advisors or to allow evaluation of one
advisor according to a particular strategy. For example, if an
investor was considering investing according to the investment
strategy of a particular advisor, he could review the actual trades
made by that advisor over the last several months and in
particular, look at buy and sell points of different stock
purchases or transactions that were made by the advisor, relative
to the daily, monthly, or yearly performance of the stock. Did he
buy low and sell high?
The entire database can be evaluated using general criteria
determined by the potential investor and advisors and selections
which meet the particular criteria can be displayed. For example,
an investor may wish to look at any advisor where there has been at
least a 20 percent return over the last three months and the fund
includes at least two of six possible stocks. The database will
have extensive detailed information with respect to the actual
trades made by the individual advisors and the timing thereof. This
is in direct contradiction to conventional mutual funds where it is
difficult to determine precisely, when stocks have been added and
whether they were added as "window dressing" near the end of a
reporting period. Furthermore, the actual trades with respect to
stocks and the timing thereof, are not typically provided by
conventional mutual funds.
With the system as described above, it will be possible to have not
only evaluation of relatively recent and new investment strategies
of different advisors, but it will also be possible to see their
performance over time. This will allow an advisor who can start
with an extremely small fund (i.e. low capitalization) to gain
reputation and as the reputation increases due to potential
investors having access to his actual performance results,
additional investors will commit to his fund. The investor has the
assurance of the investment company that the investment strategy
stated by the advisor will be adhered to and investments will not
be made outside of the investment strategy. Furthermore, the
investor's funds are held with the investment company and not with
some unknown advisor.
In some cases, particularly with relatively new advisors, the
investment company may provide them with a false or fictitious
designation of funds for investment. This will be clearly
identified to all would be investors but it will allow an advisor
to manage a fictitious portfolio according to his strategy and as
such, gain reputation with respect to potential investors. There
will also be a full break down between the fictitious funds and the
actual funds as this may well be critical information to the
investor. The information will also preferrably include the amount
of personal funds or a minimum level of investment that the actual
advisor has in the fund. This may be stated as a dollar amount, a
range, a percentage of the advisor's net worth or personal
investment portfolio.
In one embodiment of the invention, the advisor will not receive
compensation in a traditional manner. Mutual funds typically
include some sort of management fee which is based on the net asset
value of the fund and not strictly or predominately based on
performance. It is seldom that a stock in a company goes to zero.
Therefore, the net asset value of the fund allows for substantial
fees even with poor performance. Traditional mutual funds are also
typically controlled by a company that the fund manager is employed
by. This raises concern that trades may be made to generate
brokerage fees, as opposed to increase the likelihood of profit for
the individual investors. Furthermore, professional fund managers
move from fund to fund, or fund management company to fund
management company, without giving advance notice to investors. In
a preferred embodiment of the invention, there would be no
possibility of an advisor leaving his/her fund without advising the
investment company, who would immediately notify investors, then
close down the fund by selling all equity.
In contrast to the above systems, in a preferred embodiment, the
advisor is paid if his investment strategy is successful and
individual investors have profited. The advisor will not primarily
receive compensation with respect to the asset value of the fund
being managed, nor would there be compensation on actual sales or
transactions. Thus, the concern with respect to "brokerage churn",
is not in the interest of the investor and is not in the interest
of the advisor. The advisor preferrably receives compensation if an
investor decides to divest themselves of the particular fund and
has realized a profit. If the investor divests himself of the fund
and has not realized a profit, there would be no compensation. This
arrangement is preferred as the only compensation, or at least the
overall dominant compensation for an advisor managing the fund. An
advisor may receive some compensation or incentive if new investors
decide to invest.
The investment company preferrably will treat each investment
strategy as a mini advisor fund. New investors will be issued
shares or portions of shares in the advisor fund according to the
dollars invested. The investment company will manage the advisor
fund in accordance with instructions received from the advisor and
in accordance with the stated strategy of the advisor.
The investment strategy of each advisor is available in the
investment company database. The individual investors will have
confidence in the investment company for maintaining these funds as
they will be properly qualified and licensed to carry out such
transactions. Trust is built up with respect to the investment
strategy based on financial performance. Some degree of trust is
also generated based on the qualifications of the advisor as stated
on his particular webpage. For example, one advisor might have
significant expertise with respect to corn, as he is a farmer who
specializes in this particular crop. His strategy may be to invest
in corn or corn futures, or other agriculture products of his
choice. The investor who reviews this advice, not only can review
his expertise but can also review how his strategy has performed to
date, has performed in recent times, and on the investment company
database, can study recent trades or all trades of that particular
advisor. The investor can also have some comfort in that the
advisor profits on the basis that individual investors profit, and
payable when such investors realize a profit.
The advisors have the very significant benefit of having their
investment strategies reviewed and considered by a host of
potential investors who would otherwise be unavailable to them. The
provision of the system to allow an advisor to manage a portfolio
which has not been funded but is basically funded by a fictitious
amount, also allows a would-be advisor to gain reputation that may
attract investors to his advisor fund. The investors will be able
to accurately and fully evaluate the performance of a particular
advisor, essentially on a real time basis. The advisors will be
encouraged to highlight their successes, as well as explain the
particular purchases that were not successful. This type of
explanation will preferrably be available on the individual
webpages of the advisors as opposed to the database of the
investment company, unless they are included in some significant
comments of the advisors that are maintained on the investment
company database.
In one embodiment of the invention, the investment company takes
"snapshots" 34 of the advisor's personal webpages 6 and stores them
in a secure fashion so that potential investors can also look at
historical promotional, and other commentary from the advisor. This
is in contrast to typical brokers who often conveniently forget
past comments or targets.
From the above, it can be understood that an investment system has
been disclosed which has advantages with respect to clearly stating
investment strategies of particular advisors as well as providing
effective performance evaluation tools for investigating strategies
over time and based on criteria determined by preferrably the
investors. This investigation includes detailed trading
information. A distinctive break between the fund advisor and the
stock trading broker (investment company) has been made. The
investments of the advisor funds are through a licensed or
qualified agency and the stock transaction fees can be low, as the
advisors are providing the investment advice. The actual investment
strategy is being provided outside the brokerage firm and as such,
there can be no conflict of interest or at least the conflict of
interest has been very significantly reduced. The individual
investors still have the confidence of dealing with a recognized
licensed investment company and each investor has also been
provided with research tools which allow full evaluation of
different investment strategies.
The investor who is confronted with a "hot tip" from a friend or
colleague can ask his friend or colleague whether he indeed has an
investment strategy that has been identified on his webpage and
recorded with the system. If he does not, the investor can suggest
that this would be a valuable tool to allow would be investors to
more fully consider his investment advice. Similarly, if a broker
cells with particular recommendations, it would be encouraging to
have their recommendations provided on a webpage for evaluation.
Given that in each case, the investor is being asked to trust the
investment advice, it seems only reasonable that this advice should
be evaluated over time as opposed to on a one off basis. The
investor can also suggest that this would be valuable in that if an
advisor recommends a particular stock to the investor, the investor
would also like to rely on the advisor to know specifically when to
sell the stock. As opposed to buying the particular stock, the
investor can buy into the fund of the advisor. With this approach,
the investor will automatically invest in new "hot picks" of that
particular advisor, assuming they meet the strategy as stated, and
will also automatically benefit when the advisor sells the stocks
at the appropriate time without fear that such advisor will forget
to tell the investor when to sell.
The proposed system also allows investment clubs to effectively
manage their portfolio. The individual members of the club can be
purchasers in the "advisor fund of the club" with the advice of the
club clearly stated and managed through the investment company. In
some cases, it may be desirable to keep this strategy confidential
or limited to a number of users and this is also easily
accomplished and possible, according to the present strategy.
Similarly, an advisor of very significant reputation may also wish
to restrict purchases in his directed advisor fund. This system
also recognizes there are a host of experts who have particular
expertise in a certain field which has assisted them in making wise
decisions. This system allows them the opportunity to offer this
expertise to others and profit should the investors realize a
profit.
The system will highlight the strong performers and will certainly
expose the unprofitable investment decisions. Poor investment
strategy over time will be very apparent. Any party who is indeed
providing profitable investment advice over the long term can
benefit from hosting a particular webpage. Investors can review the
investment strategy with respect to recent trades as well as
performance over time in both rising and falling markets.
FIG. 2 shows a webpage 40 of an advisor. This includes a sales
promotion written by the advisor 42, as well as links to the
investment company's certified portfolio details of the advisor
investment strategy with the stated restrictions. Additional
background information such as a testimonial section and a risk
assessment may also be provided. At a minimum, the webpage includes
a hyper link 8 to the investment company computer 10, and
specifically to the page 33 maintained by the investment company
containing certified factual information. In all cases, it will be
clear to an investor which pages are providing certified
information by the investment company and which pages have been
allowed by the advisor or by other promoters of the advisor's
fund.
FIG. 3 shows a typical initial webpage of the investment company.
It provides a number of selections that can be made to either query
the database in general with respect to all advisors or a selected
group of advisors, or to select a particular advisor and to query
the success of the strategy of that advisor. There are also
provisions to indicate that an account is to be opened, or on
account status is to be obtained. An area is also provided that
allows an existing customer to carry out an account transaction, or
to effect trade execution.
FIG. 4 provides a further overview showing the investor, the
advisor, the advisor's webpage, and the computer of the investment
company. It is seen associated with the trading network.
FIG. 5 shows further details with respect to coordination of the
advisor with respect to the investment company. The ability of the
investor to review his own portfolio and provide instructions as
well as the hyper link from the advisor's webpage to the
system.
FIG. 6 is a simplification showing one investor, one advisor, the
investment company and the trading network.
FIG. 7 is again an example of the various advisors and investors
coordinated over the INTERNET and connected to a central processor
of the investment company.
FIG. 8 is an example webpage 33 of the investment company providing
information with respect to the advisor fund of Bill Snow. The
graph shows the performance of this particular advisor fund, the
average of INTERNET sector funds, and the average of all funds over
time. Other fund information is provided as well as the capability
to investigate the performance of the fund. This information
includes current and past trade executions. This information is
easily produced or maintained by a computer database system making
the information conveniently available for the host of advisor
funds.
FIG. 9 is a sample webpage of an advisor "Joe" explaining why he
can outperform the market with his stock picks. The investment
company webpage for "Joe" would merely provide the type of
information found in FIG. 8.
FIG. 10 is a webpage that allows an advisor to define a particular
fund. The advisor of the fund is encouraged to restrict the fund
and thus, restrict the advisor. This provides the potential
investors with a higher level of confidence as they probably do not
know the advisor but may agree that his restricted investments look
good.
Returning to FIG. 1, it can be seen that the computer system 10 of
the investment company also allows coordination 18 with the various
advisors. It also allows coordination with the individual investors
shown as 20. The coordination with the advisors is necessary to
allow the investment company to obtain instructions from the
different advisors with respect to the direction of his fund. For
example, when additional funds are allocated to be invested,
according to a particular investment strategy, the advisor may
receive detailed information with respect to the amount of funds
that should be invested and can provide instructions that meet his
investment strategy to the investment company. In some cases, the
advisor may wish to merely maintain a particular investment
strategy by increasing the number of shares of the previously
identified stocks. Other funds could be indicated as being placed
on hold, awaiting the advisor's instructions or the advisor could
have standing instructions with respect to investment of additional
funds. In the event that investors withdraw funds, the advisor can
also post instructions as to which stocks are to be sold first, and
at what proportions.
The present system has been described as a host of advisor funds
which are maintained by the investment company on behalf of the
individual investors. An investment of a particular investor is
made by the purchase of shares of the advisor fund. The investor
can be provided with a clear indication of any front end costs to
enter this investment. For example, it may be appropriate that
particular investor is charged with the transaction fees which are
necessary to obtain further purchases in the fund. In this way,
existing investors are not paying for the additional purchases of
stock merely to bring in an new investor. These types of costs can
be stated to the investor over the web at the time he wishes to
make his investment, he can review these costs and decide whether
the investment should go forward. Other arrangements are
possible.
The present system also allows for immediate investment by a new
investor based on a credit card authorization.
The description of this system based on a series of advisor funds
is not the only embodiment. There may be other embodiments that
meet the criteria of different licensing regulations and these are
also acceptable. The term "advisor fund" has been used merely to
indicate a mutual fund type operation but it is not limited to this
case. It can be appreciated that all funds may not operate in the
same manner. There can be a host of investment advisors and the
advisors merely put forth their particular expertise and individual
investors decide whether this would be a good investment decision.
The investment strategy of the advisor is clearly stated and
recorded with the investment company. Thus the investor is assured
that the advisor cannot suddenly decide to divest himself of all
his blue chip stocks and decide to invest in some investment which
was not previously identified without notice of a change in his
strategy.
Furthermore, "automated" advisors, which are computer algorithms
for selecting stocks based on clearly defined criteria, are also
possible under this invention.
The invention also allows for the definition of investment
strategies by "automated advisors". In those cases, the advisor is
not a person or group, but is instead, a computer generated or
general industry generated "expert". For example, an "INTERNET
Casino Fund" would be automatically generated as equal proportions
of all INTERNET based casinos, or casinos weighed by market
capitalization, or by sales. Similarly, a "Halifax Economy" fund of
all stocks in Halifax could be automatically generated.
The system is particularly designed to take advantage of the
benefits of the INTERNET and investors preferrably will be
contacted by e-mail. Notice of potential changes to the investment
strategy, for example, can be sent to the individual investors and
such investment strategy will not be adopted until a certain period
of time has expired. If an investor is not satisfied or is
concerned with respect to the risk that this change in direction
may bring, he can divest himself of the fund prior to the change in
strategy, being implemented.
This invention also allows for investors to be notified as soon as
a transaction occurs in any advisor fund they are participating in,
or monitoring. Criteria for automated generation of such e-mail or
other notification (paper, etc.) might include buying or selling of
any equity, buying or selling of a specifically identified equity,
selling any equity at a loss or gain, or a loss or gain greater
than a certain percentage.
Rather than viewing his/her portfolio as a series of investments in
advisor funds, an investor could also see the net results of all
advisor funds. Such net results could show total holdings of each
stock (or other investment) broken down by advisor fund and daily,
weekly, monthly or yearly trades. A breakdown for one investor is
shown in FIG. 11. The first table provides a listing of three
separate advisor funds with their current value, book value and day
change. The second table is a collection of the portfolio listing
the top five security exposures. This provides a useful tool to
determine whether the collective portfolio is over exposed to
several securities or is well diversified.
Although various preferred embodiments of the present invention
have been described herein in detail, it will be appreciated by
those skilled in the art, that variations may be made thereto
without departing from the spirit of the invention or the scope of
the appended claims.
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